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Rebuild the Labor Movement and Reduce Income Inequality in the United States

In a talk I gave to colleagues at Bread for the World recently about the 2014 Hunger Report: Ending Hunger in America, the subject of rising income inequality in the United States came up, and I was asked what has been driving it. There are many contributing factors, but it was a short talk so I needed a concise answer.  I zeroed in on the decline of the labor movement in the United States.

Unions and Income Inequality

I pulled the above graphic from a new briefing paper by Ricardo Fuentes-Nieva and Nicholas Galasso of Oxfam, Working for the Few: Political Capture and Inequality. Why are unions so important to maintaining a basic level of equality? Well, it’s all about bargaining power. When workers are organized, they have more bargaining power with their employers to negotiate fairer wages and other compensation such as flexible scheduling, maternity and paternity leave, and such. A worker by herself, especially one in a low-wage job, is expendable. If she requests better pay or benefits, her boss can tell her to take what she’s got or quit. The boss knows if the worker quits, it won’t be too much of a headache to replace her. But if the entire staff threatened to quit, that would be far more than a headache. It would be quite costly to hire many new staff quickly and make sure everyone was trained. Also, there would surely be some customers who found the firing of an entire staff a little disquieting and they might not want to do business with the company anymore.

The decline of union influence has also contributed to a rising problem known as wage theft. A 2008 survey of low-wage workers in Chicago, Los Angeles, and New York—the three largest U.S. cities, with a combined labor force of more than 11 million workers—found that 26 percent were paid less than the minimum wage, 76 percent had been underpaid or not paid at all for overtime hours, and 70 percent had worked off the clock before or after their paid shift. On average, the 4,387 workers in the survey were not paid for 15 percent of their time; an average of $2,634 was stolen from their annual earnings.  The vast majority of these workers were supporting at least one child. The wage theft meant that every month, families had $219.50 less to buy food and meet other expenses.

In an interview I did with Kim Bobo, executive director of the Interfaith Worker Justice Network and author of Wage Theft in America, she said there is no comprehensive study of wage theft across all 50 states, but that based on regional or city studies such as the one in Chicago, Los Angeles, and New York, she estimates that the total value of wages stolen from workers could easily reach $100 billion a year.  Imagine how much nutritious food and safe housing $100 billion would buy for families living in poverty in this country.  

The bottom line is that unions serve as watchdogs, ensuring that employers comply with workplace regulations. As union membership has fallen, workers find themselves more dependent on government inspectors to enforce the requirements of the Fair Labor Standards Act. However, business interests are quite hostile to government regulation, and this hostility has visible effects. Between 1980 and 2007, for example, the number of inspectors enforcing federal minimum wage and overtime laws declined by a third—while the labor force grew by half.

I tend to believe that “everything that goes around comes around.” Between 1933 and 1954, union density in the U.S. labor force rose from 7 percent to 28 percent, and there is little reason to believe that unions could not rise again. After all, $100 billion is an amount worth trying to recapture. Todd Post

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